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Club release official statement – Newcastle United 2017/2018 Accounts

Newcastle the last of the 20 Premier League clubs to make public the accounts for last season.

We will be doing some follow up articles analysing exactly what has happened and various individual views on the figures.

Plus, how they have been presented…

For now though, we just wanted to bring you what the club have presented on Thursday and come to some of your own conclusions.

One important point to make though is that Mike Ashley claims below that ‘the club is in a healthy financial position’, the reality is though that this is totally reliant on staying in the Premier League and however you read this NUFC presentation below, Mike Ashley has yet again been happy to gamble on that Premier League place by not backing Rafa Benitez to anywhere close to what he could have done.

Official club statement – announcing the Newcastle United 2017/2018 Accounts:

Newcastle United has announced its financial results for the year ended June 2018, which show an overall profit after tax of £18.6m following the club’s first season back in the Premier League.

A loss of £41.3m in 2017 underlined the serious financial impact of the Magpies’ relegation to the Championship. However, aided by increases in media and commercial revenue, the club is in a healthy financial position.

Lee Charnley, Newcastle United’s managing director, said: “A tenth-placed finish in our first season back in the Premier League was a fantastic achievement and I would like to thank everyone connected to the club – staff, players and fans – for their collective efforts.

“The significant increase in revenue, together with prudent financial management, resulted in the club showing a profit and that is reassuring, given the substantial loss in the previous year.

“There is much more work to be done but these positive financial results give the club a strong platform on which to build. We all want to see the club improve and be competitive at every level, and in every competition. We are convinced that the best route to achieving this is to do so sustainably, spending on young development players and adding high quality to the first team squad each season – players that can really make a difference and improve the team – without risking the financial health and stability of the club.

“We strongly believe that consistently doing the above, and robustly following this policy, will give us the best possible chance of achieving our shared ambitions.”

Accounts overview

Summary
• Turnover increased by 108%, from £85.7m to £178.5m.

• Media income rose £79.0m to £126.4m (£47.4m in 2017), reflecting the club’s tenth-place finish and 18 live TV appearances.

• Commercial income (including increases generated from club sponsors and centrally distributed Premier League sponsors) rose £14.6m to £26.7m (£12.1m in 2017).

• Operating expenses fell £21.2m to £119.6m (£140.8m in 2017). By far the most significant operating expense is wages & salaries, which fell by £18.6m to £93.6m – a wages to turnover ratio of 52.4% (£112.2m / 130.9% in 2017). Excluding amounts released in respect of prior year onerous contract provisions, the 2018 year figures are £103.4m and 57.9%, which is closer to the club’s target ratio of 60%.

Player amortisation and trading

• Amortisation and impairment of players’ registrations increased to £41.3m (£35.8m in 2017).

• Profit on disposal of players’ registrations fell to £3.6m (£42.3m in 2017).

Cash flow

• Cash balance at the year-end was £33.8m (2017 overdraft of £8.3m).

• Operating activities (excluding player trading) resulted in a cash surplus during the year of £58.7m (shortfall of £13.6m in 2017), in line with the significantly increased levels of income detailed above.
• Net cash outlay on player trading for the year was £15.7m (£11.4m in 2017).

• A cash injection of £10m from the club’s owner midway through the season was repaid in full during the year.

• In accordance with our previously stated policy the club has, since the year end, repaid the short-term element of its interest-free debt to the owner.

Lee Charnley added: “Clearing our short-term debt – some of which was meant to have been repaid much earlier – is an important responsibility and is a key part of living within our means.

“As a result of the repayment, the amount due to the owner now stands at £111m, all of which is considered, by the owner, to be long term in nature having been in place for over a decade, and repayable only in the event of the sale of the club.

“Whilst the financial results announced relate to the year ended June 2018, I would also like to take this opportunity to present an update on the club’s transfer spend since June 2018.

Set out below is a summary table for season 2017/18 (Summer 2017 and January 2018 transfer windows) and 2018/19 (Summer 2018 and January 2019 transfer windows):

“Our budget to strengthen the team and establish our place back in the Premier League has been circa £122 million over the last two seasons, which was an initial agreed budget of £70 million plus an additional £52 million generated as a result of sales and outgoing loans.

“We have spent just over 90% of that – £111 million – and the balance of £11 million will be carried forward to supplement what we have for forthcoming transfer windows as we look to strengthen again.”

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